Newshour, $140m lost after death of cryptocurrency exchange boss

07 February, 2019, 13:46 | Author: Frank Williams
  • Avoiding QuadrigaCX's $190 Million Disaster How Do the World's Largest Crypto Exchanges Store Funds? 1

Quadriga has been scrambling to sort out $250-million in debts owed to its users after it reported the sudden death of its CEO Gerald Cotten in December. The company said he was planning to open an orphanage when he passed.

Customers of a Canadian cryptocurrency exchange are reportedly unable to access $190 million of funds after the company's founder died with the passwords needed to access the money.

Robertson was not involved in the business.

The saga, just unfolding in the western media, goes back to December when Gerald Cotten, 30-year old founder of QuadrigaCX, died due to complications with Crohn's disease, according to the company and Cotten's wife, Jennifer Robertson. That's a big problem for investors because the exchange's founder, who had encrypted access to the money, died previous year. "Further updates will be issued after the hearing".

A cryptocurrency exchange in Canada has revealed they can't repay most of their clients' $190 million in Bitcoin, Litecoin, Ether, and fiat currency holdings, and no, it wasn't because of a 51 attack. An additional CA$70 million ($53 million) is in the form of government currency. Users' cryptocurrency wallets were kept offline, ensuring hackers couldn't get at them.

QuadrigaCX and its affiliated companies are registered in British Columbia, but it has no offices, no bank accounts and no employees, aside from a handful of contractors.

"Quadriga's inventory of cryptocurrency has become unavailable and some of it may be lost", she wrote.

Robertson says that she has no business information for Cotten's company or its affiliates and that all she has is the laptop that likely contains the information they need to unlock Quadriga's cold storage system. Based on company records, she said the cold wallet stored $180 million in Canadian dollars ($137 million in United States dollars), all of which is now inaccessible to QuadrigaCX and more than 100,000 customers.

"I do not know the password or recovery key", Robertson said. So effectively, QuadrigaCX's CEO died with the customers' money on his encrypted laptop.

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The statement added: "Unfortunately, these efforts have not been successful".

"This is a tough lesson learned".

Calgary customer Elvis Cavalic, who bought a few hundred dollars of Bitcoin using Quadriga's platform, told CBC that he couldn't withdraw $15,000 from his account. "I'm kind of preparing for the worst".

She noted she had received threats and slanderous comments and had seen "a significant amount of commentary on Reddit and other web-based platforms about Quadriga, Gerry's death (including whether he is really dead) and missing coins".

Very little cryptocurrency was stored in the latter for security purposes.

"If this can not be done in an orderly fashion, many, if not all users, may suffer damage", she wrote.

On 31 January the company's board of directors applied for creditor protection, with Ernst & Young expected to be appointed on Tuesday to oversee the proceedings. You simply sign into the exchange, trusting that it will secure your funds.

However, Quadrigas access to cash has been “severely compromised” by its inability to negotiate bank drafts provided by the payment processors.



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